| Type of good or service | Rate | Explanation |
|---|---|---|
| Standard rate | 19% | Applies to most goods and services |
| Reduced rate | 7% | For example: books, basic foodstuffs, newspapers |
| Exempt (0%) | 0% | Certain services such as insurance, education, medical services |
2. When must a business charge Umsatzsteuer?
A business must generally charge Umsatzsteuer if:
it is not exempt under the Kleinunternehmerregelung (small business scheme),
its turnover in the previous year exceeded €22,000,
and its expected turnover in the current year will exceed €50,000.
Kleinunternehmerregelung (small business exemption)
If your business is small and:
your turnover in the previous year was below €22,000, and
your estimated turnover in the current year is below €50,000,
you may apply for the Kleinunternehmerregelung:
you do not charge VAT on your invoices,
but you also cannot deduct input VAT (Vorsteuer) on your purchases.
3. How is Umsatzsteuer calculated?
General formulas:
Net price × VAT rate = Umsatzsteuer
Net price + Umsatzsteuer = total (gross) price for the customer
Practical example:
A company provides a service for a net price of €1,000.
VAT rate: 19%
VAT (Umsatzsteuer): €1,000 × 0.19 = €190
Total price for the customer: €1,000 + €190 = €1,190
4. What is Vorsteuer (input tax)?
Vorsteuer (input VAT) is the VAT that a business pays itself when buying goods or services from other suppliers.
This input VAT can be offset against the VAT that the business has collected from its own customers.
The net amount that must ultimately be paid to or refunded by the tax office is calculated as follows:
Umsatzsteuer collected from your customers
minus Vorsteuer paid to your suppliers
equals the amount you must transfer to the Finanzamt or that you may get refunded.
5. VAT returns (Umsatzsteuer-Voranmeldung)
Depending on annual turnover, businesses must submit VAT pre-returns at different intervals:
| Annual turnover | Frequency of VAT pre-return (Umsatzsteuer-Voranmeldung) |
|---|---|
| More than €100,000 | Monthly (monthly filing obligation) |
| €22,000 – €100,000 | Quarterly (every three months) |
| Below €22,000 | Possible exemption as Kleinunternehmer (no regular pre-returns) |
VAT returns are submitted electronically via the ELSTER online portal.
The corresponding payment to the tax office must be made within the legal deadline.
Key terms (German – English – Arabic)
| German term | English meaning | Arabic meaning |
|---|---|---|
| Umsatzsteuer | value added tax (VAT) | ضريبة القيمة المضافة |
| Mehrwertsteuer (MwSt) | another name for VAT | الاسم الآخر لـ Umsatzsteuer |
| Kleinunternehmerregelung | small business scheme | نظام الإعفاء للشركات الصغيرة |
| Vorsteuer | input VAT | ضريبة المدخلات |
| Umsatzsteuer-Voranmeldung | VAT pre-return | التصريح المسبق لضريبة القيمة المضافة |
| ELSTER | online tax platform | المنصة الإلكترونية لتقديم الضرائب |
The editorial team of our website aims to provide accurate information based on careful research and multiple sources. Nevertheless, errors may occur or some details may not be entirely confirmed. For this reason, the information in this article should be regarded as an initial guide only. Always contact the competent tax office or a professional tax advisor for binding and up-to-date information.
